A single sleek and all-electric sports sedan is turning heads in the Tesla Gallery at the Natick Mall, and not all of the attention is from admiring shoppers.
The Tesla Motors boutique and a soon-to-open sales office nearby are the subjects of two lawsuits by the Massachusetts State Automobile Dealers Association challenging the legality of the upstart automaker’s direct approach to selling its pricy, battery-driven cars.
“They are not adhering to Massachusetts laws on car sales,” said Robert O’Koniewski, the association’s executive vice president. “If this were General Motors or Ford or Toyota pulling these stunts, the regulators would be harder on them.”
The first lawsuit contends Tesla and its Massachusetts arm, Tesla Motors MA, are in violation of a state law that forbids manufacturers to sell cars directly, without an independent dealership.
The second suit alleges Natick officials rubber-stamped an improper agreement between Tesla and its company dealership when they granted a license for a sales office on Route 135 in December.
Tesla denies breaking any laws. The point to the mall showroom — and 22 others just like it nationwide — is foot traffic, according to a Tesla spokeswoman at the company’s headquarters in Palo Alto, Calif.
“Massachusetts is an important market to us,” said communications manager Shanna Hendriks. “Tesla does everything we need to do to comply with the local and state laws in every market that we open.”
The Tesla showroom at the mall is all show. Car sales are prohibited by town ordinance at the Natick Mall, which the Tesla-shirted associates inside tell shoppers before directing them to the company’s website.
Once online, customers can make a $5,000 deposit to reserve a Tesla; the company has a backlog of 13,000 vehicles. The refundable deposit qualifies prospective buyers for a test drive — but not at the mall.
Not only is the display car’s motor disabled, but test drives must be arranged through the Tesla sales office, which is expected to open soon about 2 miles away on Route 135, near the West Natick commuter rail station. A Tesla service center recently opened in Watertown.
“We place our stores and gallery locations in high foot-traffic, high visibility retail venues, like malls and shopping streets that people regularly visit,” said Hendriks. “Being a new carmaker, it is important for us to educate potential customers about Model S before they decide to buy a car.”
So far, court rulings have favored Tesla. In September, Norfolk Superior Court Judge Kenneth Fishman refused to block the Tesla boutique from opening up across from Victoria’s Secret and next door to the Walking Company. On Dec. 31, Fishman dismissed the association’s lawsuit, stating the group lacked standing since it is not affiliated with Tesla.
The dealers association has since filed an appeal of the Norfolk Superior Court case and joined a local dealership in filing a second lawsuit — this time contending in Middlesex Superior Court that the Natick Board of Selectmen illegally granted Tesla a Class 1 dealership license for the Route 135 sales office.
The group contends selectmen failed to follow the state law prohibiting manufacturers from owning their own dealerships.
“It is not rocket science,” O’Koniewski said. “You can’t just go to four selectmen in Natick and convince them to skirt the law just because it is an electric car. If it were a diesel outfit, I don’t think we would be here.”
Natick’s town counsel, David DeLuca, said the selectmen did nothing wrong in granting Tesla the license. He said the board was required only to make sure Tesla had a dealership agreement in place with a separate entity, not to cross-examine the nature of the relationship between Tesla and Tesla MA. To require any town to scrutinize the details of every agreement prior to granting licenses would create an endless cycle of inquiries, DeLuca said.
To receive a Class 1 dealership license, a dealer must have a location for sales, service, and display, DeLuca said. Traditionally, car dealerships have all three under one roof, but Tesla took a different approach, he said.
“Tesla has a different business model that I don’t see as prohibited by statute. They have a display premises at the mall, a repair premises in Watertown, and a sales premises in Natick. The Board of Selectmen reviewed it and saw that as just going about it all in an alternative fashion,” DeLuca said.
None of the quarreling has dampened the enthusiasm of car buff Paul Canney, 35, of Stoneham. Continued...